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"Moreover, you scorned our people, and compared the Albanese to sheep, and according to your custom think of us with insults. Nor have you shown yourself to have any knowledge of my race. Our elders were Epirotes, where this Pirro came from, whose force could scarcely support the Romans. This Pirro, who Taranto and many other places of Italy held back with armies. I do not have to speak for the Epiroti. They are very much stronger men than your Tarantini, a species of wet men who are born only to fish. If you want to say that Albania is part of Macedonia I would concede that a lot more of our ancestors were nobles who went as far as India under Alexander the Great and defeated all those peoples with incredible difficulty. From those men come these who you called sheep. But the nature of things is not changed. Why do your men run away in the faces of sheep?"

Letter from Skanderbeg to the Prince of Taranto ▬ Skanderbeg, October 31 1460

[quoteem]It's very nice to be here tonight.
0:13
So I've been working on the history of income and wealth distribution for the past 15 years, and one of the interesting lessons coming from this historical evidence is indeed that, in the long run, there is a tendency for the rate of return of capital to exceed the economy's growth rate, and this tends to lead to high concentration of wealth. Not infinite concentration of wealth, but the higher the gap between r and g, the higher the level of inequality of wealth towards which society tends to converge.
0:48
So this is a key force that I'm going to talk about today, but let me say right away that this is not the only important force in the dynamics of income and wealth distribution, and there are many other forces that play an important role in the long-run dynamics of income and wealth distribution. Also there is a lot of data that still needs to be collected. We know a little bit more today than we used to know, but we still know too little, and certainly there are many different processes — economic, social, political — that need to be studied more. And so I'm going to focus today on this simple force, but that doesn't mean that other important forces do not exist.
1:27
So most of the data I'm going to present comes from this database that's available online: the World Top Incomes Database. So this is the largest existing historical database on inequality, and this comes from the effort of over 30 scholars from several dozen countries. So let me show you a couple of facts coming from this database, and then we'll return to r bigger than g. So fact number one is that there has been a big reversal in the ordering of income inequality between the United States and Europe over the past century. So back in 1900, 1910, income inequality was actually much higher in Europe than in the United States, whereas today, it is a lot higher in the United States. So let me be very clear: The main explanation for this is not r bigger than g. It has more to do with changing supply and demand for skill, the race between education and technology, globalization, probably more unequal access to skills in the U.S., where you have very good, very top universities but where the bottom part of the educational system is not as good, so very unequal access to skills, and also an unprecedented rise of top managerial compensation of the United States, which is difficult to account for just on the basis of education. So there is more going on here, but I'm not going to talk too much about this today, because I want to focus on wealth inequality.
2:47
So let me just show you a very simple indicator about the income inequality part. So this is the share of total income going to the top 10 percent. So you can see that one century ago, it was between 45 and 50 percent in Europe and a little bit above 40 percent in the U.S., so there was more inequality in Europe. Then there was a sharp decline during the first half of the 20th century, and in the recent decade, you can see that the U.S. has become more unequal than Europe, and this is the first fact I just talked about. Now, the second fact is more about wealth inequality, and here the central fact is that wealth inequality is always a lot higher than income inequality, and also that wealth inequality, although it has also increased in recent decades, is still less extreme today than what it was a century ago, although the total quantity of wealth relative to income has now recovered from the very large shocks caused by World War I, the Great Depression, World War II.
3:49
So let me show you two graphs illustrating fact number two and fact number three. So first, if you look at the level of wealth inequality, this is the share of total wealth going to the top 10 percent of wealth holders, so you can see the same kind of reversal between the U.S. and Europe that we had before for income inequality. So wealth concentration was higher in Europe than in the U.S. a century ago, and now it is the opposite. But you can also show two things: First, the general level of wealth inequality is always higher than income inequality. So remember, for income inequality, the share going to the top 10 percent was between 30 and 50 percent of total income, whereas for wealth, the share is always between 60 and 90 percent. Okay, so that's fact number one, and that's very important for what follows. Wealth concentration is always a lot higher than income concentration.
4:47
Fact number two is that the rise in wealth inequality in recent decades is still not enough to get us back to 1910. So the big difference today, wealth inequality is still very large, with 60, 70 percent of total wealth for the top 10, but the good news is that it's actually better than one century ago, where you had 90 percent in Europe going to the top 10. So today what you have is what I call the middle 40 percent, the people who are not in the top 10 and who are not in the bottom 50, and what you can view as the wealth middle class that owns 20 to 30 percent of total wealth, national wealth, whereas they used to be poor, a century ago, when there was basically no wealth middle class. So this is an important change, and it's interesting to see that wealth inequality has not fully recovered to pre-World War I levels, although the total quantity of wealth has recovered. Okay? So this is the total value of wealth relative to income, and you can see that in particular in Europe, we are almost back to the pre-World War I level. So there are really two different parts of the story here. One has to do with the total quantity of wealth that we accumulate, and there is nothing bad per se, of course, in accumulating a lot of wealth, and in particular if it is more diffuse and less concentrated. So what we really want to focus on is the long-run evolution of wealth inequality, and what's going to happen in the future. How can we account for the fact that until World War I, wealth inequality was so high and, if anything, was rising to even higher levels, and how can we think about the future?
6:31
So let me come to some of the explanations and speculations about the future. Let me first say that probably the best model to explain why wealth is so much more concentrated than income is a dynamic, dynastic model where individuals have a long horizon and accumulate wealth for all sorts of reasons. If people were accumulating wealth only for life cycle reasons, you know, to be able to consume when they are old, then the level of wealth inequality should be more or less in line with the level of income inequality. But it will be very difficult to explain why you have so much more wealth inequality than income inequality with a pure life cycle model, so you need a story where people also care about wealth accumulation for other reasons. So typically, they want to transmit wealth to the next generation, to their children, or sometimes they want to accumulate wealth because of the prestige, the power that goes with wealth. So there must be other reasons for accumulating wealth than just life cycle to explain what we see in the data. Now, in a large class of dynamic models of wealth accumulation with such dynastic motive for accumulating wealth, you will have all sorts of random, multiplicative shocks. So for instance, some families have a very large number of children, so the wealth will be divided. Some families have fewer children. You also have shocks to rates of return. Some families make huge capital gains. Some made bad investments. So you will always have some mobility in the wealth process. Some people will move up, some people will move down. The important point is that, in any such model, for a given variance of such shocks, the equilibrium level of wealth inequality will be a steeply rising function of r minus g. And intuitively, the reason why the difference between the rate of return to wealth and the growth rate is important is that initial wealth inequalities will be amplified at a faster pace with a bigger r minus g. So take a simple example, with r equals five percent and g equals one percent, wealth holders only need to reinvest one fifth of their capital income to ensure that their wealth rises as fast as the size of the economy. So this makes it easier to build and perpetuate large fortunes because you can consume four fifths, assuming zero tax, and you can just reinvest one fifth. So of course some families will consume more than that, some will consume less, so there will be some mobility in the distribution, but on average, they only need to reinvest one fifth, so this allows high wealth inequalities to be sustained.
9:11
Now, you should not be surprised by the statement that r can be bigger than g forever, because, in fact, this is what happened during most of the history of mankind. And this was in a way very obvious to everybody for a simple reason, which is that growth was close to zero percent during most of the history of mankind. Growth was maybe 0.1, 0.2, 0.3 percent, but very slow growth of population and output per capita, whereas the rate of return on capital of course was not zero percent. It was, for land assets, which was the traditional form of assets in preindustrial societies, it was typically five percent. Any reader of Jane Austen would know that. If you want an annual income of 1,000 pounds, you should have a capital value of 20,000 pounds so that five percent of 20,000 is 1,000. And in a way, this was the very foundation of society, because r bigger than g was what allowed holders of wealth and assets to live off their capital income and to do something else in life than just to care about their own survival.
10:21
Now, one important conclusion of my historical research is that modern industrial growth did not change this basic fact as much as one might have expected. Of course, the growth rate following the Industrial Revolution rose, typically from zero to one to two percent, but at the same time, the rate of return to capital also rose so that the gap between the two did not really change. So during the 20th century, you had a very unique combination of events. First, a very low rate of return due to the 1914 and 1945 war shocks, destruction of wealth, inflation, bankruptcy during the Great Depression, and all of this reduced the private rate of return to wealth to unusually low levels between 1914 and 1945. And then, in the postwar period, you had unusually high growth rate, partly due to the reconstruction. You know, in Germany, in France, in Japan, you had five percent growth rate between 1950 and 1980 largely due to reconstruction, and also due to very large demographic growth, the Baby Boom Cohort effect. Now, apparently that's not going to last for very long, or at least the population growth is supposed to decline in the future, and the best projections we have is that the long-run growth is going to be closer to one to two percent rather than four to five percent. So if you look at this, these are the best estimates we have of world GDP growth and rate of return on capital, average rates of return on capital, so you can see that during most of the history of mankind, the growth rate was very small, much lower than the rate of return, and then during the 20th century, it is really the population growth, very high in the postwar period, and the reconstruction process that brought growth to a smaller gap with the rate of return. Here I use the United Nations population projections, so of course they are uncertain. It could be that we all start having a lot of children in the future, and the growth rates are going to be higher, but from now on, these are the best projections we have, and this will make global growth decline and the gap between the rate of return go up.
12:37
Now, the other unusual event during the 20th century was, as I said, destruction, taxation of capital, so this is the pre-tax rate of return. This is the after-tax rate of return, and after destruction, and this is what brought the average rate of return after tax, after destruction, below the growth rate during a long time period. But without the destruction, without the taxation, this would not have happened. So let me say that the balance between returns on capital and growth depends on many different factors that are very difficult to predict: technology and the development of capital-intensive techniques. So right now, the most capital-intensive sectors in the economy are the real estate sector, housing, the energy sector, but it could be in the future that we have a lot more robots in a number of sectors and that this would be a bigger share of the total capital stock that it is today. Well, we are very far from this, and from now, what's going on in the real estate sector, the energy sector, is much more important for the total capital stock and capital share.
13:44
The other important issue is that there are scale effects in portfolio management, together with financial complexity, financial deregulation, that make it easier to get higher rates of return for a large portfolio, and this seems to be particularly strong for billionaires, large capital endowments. Just to give you one example, this comes from the Forbes billionaire rankings over the 1987-2013 period, and you can see the very top wealth holders have been going up at six, seven percent per year in real terms above inflation, whereas average income in the world, average wealth in the world, have increased at only two percent per year. And you find the same for large university endowments — the bigger the initial endowments, the bigger the rate of return.
14:33
Now, what could be done? The first thing is that I think we need more financial transparency. We know too little about global wealth dynamics, so we need international transmission of bank information. We need a global registry of financial assets, more coordination on wealth taxation, and even wealth tax with a small tax rate will be a way to produce information so that then we can adapt our policies to whatever we observe. And to some extent, the fight against tax havens and automatic transmission of information is pushing us in this direction. Now, there are other ways to redistribute wealth, which it can be tempting to use. Inflation: it's much easier to print money than to write a tax code, so that's very tempting, but sometimes you don't know what you do with the money. This is a problem. Expropriation is very tempting. Just when you feel some people get too wealthy, you just expropriate them. But this is not a very efficient way to organize a regulation of wealth dynamics. So war is an even less efficient way, so I tend to prefer progressive taxation, but of course, history — (Laughter) — history will invent its own best ways, and it will probably involve a combination of all of these.
15:45
Thank you.
15:47
(Applause)
15:49
Bruno Giussani: Thomas Piketty. Thank you.
15:54
Thomas, I want to ask you two or three questions, because it's impressive how you're in command of your data, of course, but basically what you suggest is growing wealth concentration is kind of a natural tendency of capitalism, and if we leave it to its own devices, it may threaten the system itself, so you're suggesting that we need to act to implement policies that redistribute wealth, including the ones we just saw: progressive taxation, etc. In the current political context, how realistic are those? How likely do you think that it is that they will be implemented?
16:29
Thomas Piketty: Well, you know, I think if you look back through time, the history of income, wealth and taxation is full of surprise. So I am not terribly impressed by those who know in advance what will or will not happen. I think one century ago, many people would have said that progressive income taxation would never happen and then it happened. And even five years ago, many people would have said that bank secrecy will be with us forever in Switzerland, that Switzerland was too powerful for the rest of the world, and then suddenly it took a few U.S. sanctions against Swiss banks for a big change to happen, and now we are moving toward more financial transparency. So I think it's not that difficult to better coordinate politically. We are going to have a treaty with half of the world GDP around the table with the U.S. and the European Union, so if half of the world GDP is not enough to make progress on financial transparency and minimal tax for multinational corporate profits, what does it take? So I think these are not technical difficulties. I think we can make progress if we have a more pragmatic approach to these questions and we have the proper sanctions on those who benefit from financial opacity.
17:45
BG: One of the arguments against your point of view is that economic inequality is not only a feature of capitalism but is actually one of its engines. So we take measures to lower inequality, and at the same time we lower growth, potentially. What do you answer to that?
18:00
TP: Yeah, I think inequality is not a problem per se. I think inequality up to a point can actually be useful for innovation and growth. The problem is, it's a question of degree. When inequality gets too extreme, then it becomes useless for growth and it can even become bad because it tends to lead to high perpetuation of inequality over time and low mobility. And for instance, the kind of wealth concentrations that we had in the 19th century and pretty much until World War I in every European country was, I think, not useful for growth. This was destroyed by a combination of tragic events and policy changes, and this did not prevent growth from happening. And also, extreme inequality can be bad for our democratic institutions if it creates very unequal access to political voice, and the influence of private money in U.S. politics, I think, is a matter of concern right now. So we don't want to return to that kind of extreme, pre-World War I inequality. Having a decent share of the national wealth for the middle class is not bad for growth. It is actually useful both for equity and efficiency reasons.
19:13
BG: I said at the beginning that your book has been criticized. Some of your data has been criticized. Some of your choice of data sets has been criticized. You have been accused of cherry-picking data to make your case. What do you answer to that?
19:25
TP: Well, I answer that I am very happy that this book is stimulating debate. This is part of what it is intended for. Look, the reason why I put all the data online with all of the detailed computation is so that we can have an open and transparent debate about this. So I have responded point by point to every concern. Let me say that if I was to rewrite the book today, I would actually conclude that the rise in wealth inequality, particularly in the United States, has been actually higher than what I report in my book. There is a recent study by Saez and Zucman showing, with new data which I didn't have at the time of the book, that wealth concentration in the U.S. has risen even more than what I report. And there will be other data in the future. Some of it will go in different directions. Look, we put online almost every week new, updated series on the World Top Income Database and we will keep doing so in the future, in particular in emerging countries, and I welcome all of those who want to contribute to this data collection process. In fact, I certainly agree that there is not enough transparency about wealth dynamics, and a good way to have better data would be to have a wealth tax with a small tax rate to begin with so that we can all agree about this important evolution and adapt our policies to whatever we observe. So taxation is a source of knowledge, and that's what we need the most right now.
20:52
BG: Thomas Piketty, merci beaucoup.
20:54
Thank you. TP: Thank you. (Applause)[/quoteem]

[quoteem]You probably don't know me, but I am one of those .01 percenters that you hear about and read about, and I am by any reasonable definition a plutocrat. And tonight, what I would like to do is speak directly to other plutocrats, to my people, because it feels like it's time for us all to have a chat. Like most plutocrats, I too am a proud and unapologetic capitalist. I have founded, cofounded or funded over 30 companies across a range of industries. I was the first non-family investor in Amazon.com. I cofounded a company called aQuantive that we sold to Microsoft for 6.4 billion dollars. My friends and I, we own a bank. I tell you this — (Laughter) — unbelievable, right?
1:03
I tell you this to show that my life is like most plutocrats. I have a broad perspective on capitalism and business, and I have been rewarded obscenely for that with a life that most of you all can't even imagine: multiple homes, a yacht, my own plane, etc., etc., etc. But let's be honest: I am not the smartest person you've ever met. I am certainly not the hardest working. I was a mediocre student. I'm not technical at all. I can't write a word of code. Truly, my success is the consequence of spectacular luck, of birth, of circumstance and of timing. But I am actually pretty good at a couple of things. One, I have an unusually high tolerance for risk, and the other is I have a good sense, a good intuition about what will happen in the future, and I think that that intuition about the future is the essence of good entrepreneurship.
2:12
So what do I see in our future today, you ask? I see pitchforks, as in angry mobs with pitchforks, because while people like us plutocrats are living beyond the dreams of avarice, the other 99 percent of our fellow citizens are falling farther and farther behind. In 1980, the top one percent of Americans shared about eight percent of national [income], while the bottom 50 percent of Americans shared 18 percent. Thirty years later, today, the top one percent shares over 20 percent of national [income], while the bottom 50 percent of Americans share 12 or 13. If the trend continues, the top one percent will share over 30 percent of national [income] in another 30 years, while the bottom 50 percent of Americans will share just six.
3:11
You see, the problem isn't that we have some inequality. Some inequality is necessary for a high-functioning capitalist democracy. The problem is that inequality is at historic highs today and it's getting worse every day. And if wealth, power, and income continue to concentrate at the very tippy top, our society will change from a capitalist democracy to a neo-feudalist rentier society like 18th-century France. That was France before the revolution and the mobs with the pitchforks.
3:52
So I have a message for my fellow plutocrats and zillionaires and for anyone who lives in a gated bubble world: Wake up. Wake up. It cannot last. Because if we do not do something to fix the glaring economic inequities in our society, the pitchforks will come for us, for no free and open society can long sustain this kind of rising economic inequality. It has never happened. There are no examples. You show me a highly unequal society, and I will show you a police state or an uprising. The pitchforks will come for us if we do not address this. It's not a matter of if, it's when. And it will be terrible when they come for everyone, but particularly for people like us plutocrats.
4:48
I know I must sound like some liberal do-gooder. I'm not. I'm not making a moral argument that economic inequality is wrong. What I am arguing is that rising economic inequality is stupid and ultimately self-defeating. Rising inequality doesn't just increase our risks from pitchforks, but it's also terrible for business too. So the model for us rich guys should be Henry Ford. When Ford famously introduced the $5 day, which was twice the prevailing wage at the time, he didn't just increase the productivity of his factories, he converted exploited autoworkers who were poor into a thriving middle class who could now afford to buy the products that they made. Ford intuited what we now know is true, that an economy is best understood as an ecosystem and characterized by the same kinds of feedback loops you find in a natural ecosystem, a feedback loop between customers and businesses. Raising wages increases demand, which increases hiring, which in turn increases wages and demand and profits, and that virtuous cycle of increasing prosperity is precisely what is missing from today's economic recovery.
6:18
And this is why we need to put behind us the trickle-down policies that so dominate both political parties and embrace something I call middle-out economics. Middle-out economics rejects the neoclassical economic idea that economies are efficient, linear, mechanistic, that they tend towards equilibrium and fairness, and instead embraces the 21st-century idea that economies are complex, adaptive, ecosystemic, that they tend away from equilibrium and toward inequality, that they're not efficient at all but are effective if well managed. This 21st-century perspective allows you to clearly see that capitalism does not work by [efficiently] allocating existing resources. It works by [efficiently] creating new solutions to human problems. The genius of capitalism is that it is an evolutionary solution-finding system. It rewards people for solving other people's problems. The difference between a poor society and a rich society, obviously, is the degree to which that society has generated solutions in the form of products for its citizens. The sum of the solutions that we have in our society really is our prosperity, and this explains why companies like Google and Amazon and Microsoft and Apple and the entrepreneurs who created those companies have contributed so much to our nation's prosperity.
8:07
This 21st-century perspective also makes clear that what we think of as economic growth is best understood as the rate at which we solve problems. But that rate is totally dependent upon how many problem solvers — diverse, able problem solvers — we have, and thus how many of our fellow citizens actively participate, both as entrepreneurs who can offer solutions, and as customers who consume them. But this maximizing participation thing doesn't happen by accident. It doesn't happen by itself. It requires effort and investment, which is why all highly prosperous capitalist democracies are characterized by massive investments in the middle class and the infrastructure that they depend on.
9:06
We plutocrats need to get this trickle-down economics thing behind us, this idea that the better we do, the better everyone else will do. It's not true. How could it be? I earn 1,000 times the median wage, but I do not buy 1,000 times as much stuff, do I? I actually bought two pairs of these pants, what my partner Mike calls my manager pants. I could have bought 2,000 pairs, but what would I do with them? (Laughter) How many haircuts can I get? How often can I go out to dinner? No matter how wealthy a few plutocrats get, we can never drive a great national economy. Only a thriving middle class can do that. There's nothing to be done, my plutocrat friends might say. Henry Ford was in a different time. Maybe we can't do some things. Maybe we can do some things. June 19, 2013, Bloomberg published an article I wrote called "The Capitalist’s Case for a $15 Minimum Wage." The good people at Forbes magazine, among my biggest admirers, called it "Nick Hanauer's near-insane proposal." And yet, just 350 days after that article was published, Seattle's Mayor Ed Murray signed into law an ordinance raising the minimum wage in Seattle to 15 dollars an hour, more than double what the prevailing federal $7.25 rate is. How did this happen, reasonable people might ask. It happened because a group of us reminded the middle class that they are the source of growth and prosperity in capitalist economies. We reminded them that when workers have more money, businesses have more customers, and need more employees. We reminded them that when businesses pay workers a living wage, taxpayers are relieved of the burden of funding the poverty programs like food stamps and medical assistance and rent assistance that those workers need. We reminded them that low-wage workers make terrible taxpayers, and that when you raise the minimum wage for all businesses, all businesses benefit yet all can compete.
11:46
Now the orthodox reaction, of course, is raising the minimum wage costs jobs. Right? Your politician's always echoing that trickle-down idea by saying things like, "Well, if you raise the price of employment, guess what happens? You get less of it."
12:02
Are you sure? Because there's some contravening evidence. Since 1980, the wages of CEOs in our country have gone from about 30 times the median wage to 500 times. That's raising the price of employment. And yet, to my knowledge, I have never seen a company outsource its CEO's job, automate their job, export the job to China. In fact, we appear to be employing more CEOs and senior managers than ever before. So too for technology workers and financial services workers, who earn multiples of the median wage and yet we employ more and more of them, so clearly you can raise the price of employment and get more of it.
12:55
I know that most people think that the $15 minimum wage is this insane, risky economic experiment. We disagree. We believe that the $15 minimum wage in Seattle is actually the continuation of a logical economic policy. It is allowing our city to kick your city's ass. Because, you see, Washington state already has the highest minimum wage of any state in the nation. We pay all workers $9.32, which is almost 30 percent more than the federal minimum of 7.25, but crucially, 427 percent more than the federal tipped minimum of 2.13. If trickle-down thinkers were right, then Washington state should have massive unemployment. Seattle should be sliding into the ocean. And yet, Seattle is the fastest-growing big city in the country. Washington state is generating small business jobs at a higher rate than any other major state in the nation. The restaurant business in Seattle? Booming. Why? Because the fundamental law of capitalism is, when workers have more money, businesses have more customers and need more workers. When restaurants pay restaurant workers enough so that even they can afford to eat in restaurants, that's not bad for the restaurant business. That's good for it, despite what some restaurateurs may tell you.
14:32
Is it more complicated than I'm making out? Of course it is. There are a lot of dynamics at play. But can we please stop insisting that if low-wage workers earn a little bit more, unemployment will skyrocket and the economy will collapse? There is no evidence for it. The most insidious thing about trickle-down economics is not the claim that if the rich get richer, everyone is better off. It is the claim made by those who oppose any increase in the minimum wage that if the poor get richer, that will be bad for the economy. This is nonsense. So can we please dispense with this rhetoric that says that rich guys like me and my plutocrat friends made our country? We plutocrats know, even if we don't like to admit it in public, that if we had been born somewhere else, not here in the United States, we might very well be just some dude standing barefoot by the side of a dirt road selling fruit. It's not that they don't have good entrepreneurs in other places, even very, very poor places. It's just that that's all that those entrepreneurs' customers can afford.
15:42
So here's an idea for a new kind of economics, a new kind of politics that I call new capitalism. Let's acknowledge that capitalism beats the alternatives, but also that the more people we include, both as entrepreneurs and as customers, the better it works. Let's by all means shrink the size of government, but not by slashing the poverty programs, but by ensuring that workers are paid enough so that they actually don't need those programs. Let's invest enough in the middle class to make our economy fairer and more inclusive, and by fairer, more truly competitive, and by more truly competitive, more able to generate the solutions to human problems that are the true drivers of growth and prosperity. Capitalism is the greatest social technology ever invented for creating prosperity in human societies, if it is well managed, but capitalism, because of the fundamental multiplicative dynamics of complex systems, tends towards, inexorably, inequality, concentration and collapse. The work of democracies is to maximize the inclusion of the many in order to create prosperity, not to enable the few to accumulate money. Government does create prosperity and growth, by creating the conditions that allow both entrepreneurs and their customers to thrive. Balancing the power of capitalists like me and workers isn't bad for capitalism. It's essential to it. Programs like a reasonable minimum wage, affordable healthcare, paid sick leave, and the progressive taxation necessary to pay for the important infrastructure necessary for the middle class like education, R and D, these are indispensable tools shrewd capitalists should embrace to drive growth, because no one benefits from it like us.
18:01
Many economists would have you believe that their field is an objective science. I disagree, and I think that it is equally a tool that humans use to enforce and encode our social and moral preferences and prejudices about status and power, which is why plutocrats like me have always needed to find persuasive stories to tell everyone else about why our relative positions are morally righteous and good for everyone: like, we are indispensable, the job creators, and you are not; like, tax cuts for us create growth, but investments in you will balloon our debt and bankrupt our great country; that we matter; that you don't. For thousands of years, these stories were called divine right. Today, we have trickle-down economics. How obviously, transparently self-serving all of this is. We plutocrats need to see that the United States of America made us, not the other way around; that a thriving middle class is the source of prosperity in capitalist economies, not a consequence of it. And we should never forget that even the best of us in the worst of circumstances are barefoot by the side of a dirt road selling fruit.
19:37
Fellow plutocrats, I think it may be time for us to recommit to our country, to commit to a new kind of capitalism which is both more inclusive and more effective, a capitalism that will ensure that America's economy remains the most dynamic and prosperous in the world. Let's secure the future for ourselves, our children and their children. Or alternatively, we could do nothing, hide in our gated communities and private schools, enjoy our planes and yachts — they're fun — and wait for the pitchforks.
20:17
Thank you.
20:18
(Applause)[/quoteem]

[quoteem]Hans Rosling: I'm going to ask you three multiple choice questions. Use this device. Use this device to answer. The first question is, how did the number of deaths per year from natural disaster, how did that change during the last century? Did it more than double, did it remain about the same in the world as a whole, or did it decrease to less than half? Please answer A, B or C. I see lots of answers. This is much faster than I do it at universities. They are so slow. They keep thinking, thinking, thinking. Oh, very, very good.
0:45
And we go to the next question. So how long did women 30 years old in the world go to school: seven years, five years or three years? A, B or C? Please answer.
1:01
And we go to the next question. In the last 20 years, how did the percentage of people in the world who live in extreme poverty change? Extreme poverty — not having enough food for the day. Did it almost double, did it remain more or less the same, or did it halve? A, B or C?
1:22
Now, answers. You see, deaths from natural disasters in the world, you can see it from this graph here, from 1900 to 2000. In 1900, there was about half a million people who died every year from natural disasters: floods, earthquakes, volcanic eruption, whatever, droughts. And then, how did that change?
1:46
Gapminder asked the public in Sweden. This is how they answered. The Swedish public answered like this: Fifty percent thought it had doubled, 38 percent said it's more or less the same, 12 said it had halved. This is the best data from the disaster researchers, and it goes up and down, and it goes to the Second World War, and after that it starts to fall and it keeps falling and it's down to much less than half. The world has been much, much more capable as the decades go by to protect people from this, you know. So only 12 percent of the Swedes know this.
2:22
So I went to the zoo and I asked the chimps. (Laughter) (Applause) The chimps don't watch the evening news, so the chimps, they choose by random, so the Swedes answer worse than random. Now how did you do? That's you. You were beaten by the chimps. (Laughter) But it was close. You were three times better than the Swedes, but that's not enough. You shouldn't compare yourself to Swedes. You must have higher ambitions in the world.
3:11
Let's look at the next answer here: women in school. Here, you can see men went eight years. How long did women go to school? Well, we asked the Swedes like this, and that gives you a hint, doesn't it? The right answer is probably the one the fewest Swedes picked, isn't it? (Laughter) Let's see, let's see. Here we come. Yes, yes, yes, women have almost caught up. This is the U.S. public. And this is you. Here you come. Ooh. Well, congratulations, you're twice as good as the Swedes, but you don't need me —
3:52
So how come? I think it's like this, that everyone is aware that there are countries and there are areas where girls have great difficulties. They are stopped when they go to school, and it's disgusting. But in the majority of the world, where most people in the world live, most countries, girls today go to school as long as boys, more or less. That doesn't mean that gender equity is achieved, not at all. They still are confined to terrible, terrible limitations, but schooling is there in the world today. Now, we miss the majority. When you answer, you answer according to the worst places, and there you are right, but you miss the majority.
4:37
What about poverty? Well, it's very clear that poverty here was almost halved, and in U.S., when we asked the public, only five percent got it right. And you? Ah, you almost made it to the chimps. (Laughter) (Applause) That little, just a few of you! There must be preconceived ideas, you know. And many in the rich countries, they think that oh, we can never end extreme poverty. Of course they think so, because they don't even know what has happened. The first thing to think about the future is to know about the present.
5:22
These questions were a few of the first ones in the pilot phase of the Ignorance Project in Gapminder Foundation that we run, and it was started, this project, last year by my boss, and also my son, Ola Rosling. (Laughter) He's cofounder and director, and he wanted, Ola told me we have to be more systematic when we fight devastating ignorance. So already the pilots reveal this, that so many in the public score worse than random, so we have to think about preconceived ideas, and one of the main preconceived ideas is about world income distribution.
5:57
Look here. This is how it was in 1975. It's the number of people on each income, from one dollar a day — (Applause) See, there was one hump here, around one dollar a day, and then there was one hump here somewhere between 10 and 100 dollars. The world was two groups. It was a camel world, like a camel with two humps, the poor ones and the rich ones, and there were fewer in between.
6:26
But look how this has changed: As I go forward, what has changed, the world population has grown, and the humps start to merge. The lower humps merged with the upper hump, and the camel dies and we have a dromedary world with one hump only. The percent in poverty has decreased. Still it's appalling that so many remain in extreme poverty. We still have this group, almost a billion, over there, but that can be ended now.
6:56
The challenge we have now is to get away from that, understand where the majority is, and that is very clearly shown in this question. We asked, what is the percentage of the world's one-year-old children who have got those basic vaccines against measles and other things that we have had for many years: 20, 50 or 80 percent? Now, this is what the U.S. public and the Swedish answered. Look at the Swedish result: you know what the right answer is. (Laughter) Who the heck is a professor of global health in that country? Well, it's me. It's me. (Laughter) It's very difficult, this. It's very difficult. (Applause)
7:37
However, Ola's approach to really measure what we know made headlines, and CNN published these results on their web and they had the questions there, millions answered, and I think there were about 2,000 comments, and this was one of the comments. "I bet no member of the media passed the test," he said.
7:59
So Ola told me, "Take these devices. You are invited to media conferences. Give it to them and measure what the media know." And ladies and gentlemen, for the first time, the informal results from a conference with U.S. media. And then, lately, from the European Union media. (Laughter) You see, the problem is not that people don't read and listen to the media. The problem is that the media doesn't know themselves.
8:28
What shall we do about this, Ola? Do we have any ideas? (Applause)
8:43
Ola Rosling: Yes, I have an idea, but first, I'm so sorry that you were beaten by the chimps. Fortunately, I will be able to comfort you by showing why it was not your fault, actually. Then, I will equip you with some tricks for beating the chimps in the future. That's basically what I will do.
9:04
But first, let's look at why are we so ignorant, and it all starts in this place. It's Hudiksvall. It's a city in northern Sweden. It's a neighborhood where I grew up, and it's a neighborhood with a large problem. Actually, it has exactly the same problem which existed in all the neighborhoods where you grew up as well. It was not representative. Okay? It gave me a very biased view of how life is on this planet. So this is the first piece of the ignorance puzzle. We have a personal bias.
9:37
We have all different experiences from communities and people we meet, and on top of this, we start school, and we add the next problem. Well, I like schools, but teachers tend to teach outdated worldviews, because they learned something when they went to school, and now they describe this world to the students without any bad intentions, and those books, of course, that are printed are outdated in a world that changes. And there is really no practice to keep the teaching material up to date. So that's what we are focusing on. So we have these outdated facts added on top of our personal bias.
10:16
What happens next is news, okay? An excellent journalist knows how to pick the story that will make headlines, and people will read it because it's sensational. Unusual events are more interesting, no? And they are exaggerated, and especially things we're afraid of. A shark attack on a Swedish person will get headlines for weeks in Sweden.
10:41
So these three skewed sources of information were really hard to get away from. They kind of bombard us and equip our mind with a lot of strange ideas, and on top of it we put the very thing that makes us humans, our human intuition. It was good in evolution. It helped us generalize and jump to conclusions very, very fast. It helped us exaggerate what we were afraid of, and we seek causality where there is none, and we then get an illusion of confidence where we believe that we are the best car drivers, above the average. Everybody answered that question, "Yeah, I drive cars better."
11:26
Okay, this was good evolutionarily, but now when it comes to the worldview, it is the exact reason why it's upside down. The trends that are increasing are instead falling, and the other way around, and in this case, the chimps use our intuition against us, and it becomes our weakness instead of our strength. It was supposed to be our strength, wasn't it?
11:48
So how do we solve such problems? First, we need to measure it, and then we need to cure it. So by measuring it we can understand what is the pattern of ignorance. We started the pilot last year, and now we're pretty sure that we will encounter a lot of ignorance across the whole world, and the idea is really to scale it up to all domains or dimensions of global development, such as climate, endangered species, human rights, gender equality, energy, finance. All different sectors have facts, and there are organizations trying to spread awareness about these facts. So I've started actually contacting some of them, like WWF and Amnesty International and UNICEF, and asking them, what are your favorite facts which you think the public doesn't know?
12:39
Okay, I gather those facts. Imagine a long list with, say, 250 facts. And then we poll the public and see where they score worst. So we get a shorter list with the terrible results, like some few examples from Hans, and we have no problem finding these kinds of terrible results. Okay, this little shortlist, what are we going to do with it? Well, we turn it into a knowledge certificate, a global knowledge certificate, which you can use, if you're a large organization, a school, a university, or maybe a news agency, to certify yourself as globally knowledgeable. Basically meaning, we don't hire people who score like chimpanzees. Of course you shouldn't. So maybe 10 years from now, if this project succeeds, you will be sitting in an interview having to fill out this crazy global knowledge.
13:33
So now we come to the practical tricks. How are you going to succeed? There is, of course, one way, which is to sit down late nights and learn all the facts by heart by reading all these reports. That will never happen, actually. Not even Hans thinks that's going to happen. People don't have that time. People like shortcuts, and here are the shortcuts. We need to turn our intuition into strength again. We need to be able to generalize. So now I'm going to show you some tricks where the misconceptions are turned around into rules of thumb.
14:09
Let's start with the first misconception. This is very widespread. Everything is getting worse. You heard it. You thought it yourself. The other way to think is, most things improve. So you're sitting with a question in front of you and you're unsure. You should guess "improve." Okay? Don't go for the worse. That will help you score better on our tests. (Applause) That was the first one.
14:37
There are rich and poor and the gap is increasing. It's a terrible inequality. Yeah, it's an unequal world, but when you look at the data, it's one hump. Okay? If you feel unsure, go for "the most people are in the middle." That's going to help you get the answer right.
14:53
Now, the next preconceived idea is first countries and people need to be very, very rich to get the social development like girls in school and be ready for natural disasters. No, no, no. That's wrong. Look: that huge hump in the middle already have girls in school. So if you are unsure, go for the "the majority already have this," like electricity and girls in school, these kinds of things. They're only rules of thumb, so of course they don't apply to everything, but this is how you can generalize.
15:25
Let's look at the last one. If something, yes, this is a good one, sharks are dangerous. No — well, yes, but they are not so important in the global statistics, that is what I'm saying. I actually, I'm very afraid of sharks. So as soon as I see a question about things I'm afraid of, which might be earthquakes, other religions, maybe I'm afraid of terrorists or sharks, anything that makes me feel, assume you're going to exaggerate the problem. That's a rule of thumb. Of course there are dangerous things that are also great. Sharks kill very, very few. That's how you should think.
16:03
With these four rules of thumb, you could probably answer better than the chimps, because the chimps cannot do this. They cannot generalize these kinds of rules. And hopefully we can turn your world around and we're going to beat the chimps. Okay? (Applause) That's a systematic approach.
16:32
Now the question, is this important? Yeah, it's important to understand poverty, extreme poverty and how to fight it, and how to bring girls in school. When we realize that actually it's succeeding, we can understand it. But is it important for everyone else who cares about the rich end of this scale? I would say yes, extremely important, for the same reason. If you have a fact-based worldview of today, you might have a chance to understand what's coming next in the future.
17:01
We're going back to these two humps in 1975. That's when I was born, and I selected the West. That's the current EU countries and North America. Let's now see how the rest and the West compares in terms of how rich you are. These are the people who can afford to fly abroad with an airplane for a vacation. In 1975, only 30 percent of them lived outside EU and North America. But this has changed, okay? So first, let's look at the change up till today, 2014. Today it's 50/50. The Western domination is over, as of today. That's nice. So what's going to happen next? Do you see the big hump? Did you see how it moved? I did a little experiment. I went to the IMF, International Monetary Fund, website. They have a forecast for the next five years of GDP per capita. So I can use that to go five years into the future, assuming the income inequality of each country is the same. I did that, but I went even further. I used those five years for the next 20 years with the same speed, just as an experiment what might actually happen. Let's move into the future. In 2020, it's 57 percent in the rest. In 2025, 63 percent. 2030, 68. And in 2035, the West is outnumbered in the rich consumer market. These are just projections of GDP per capita into the future. Seventy-three percent of the rich consumers are going to live outside North America and Europe. So yes, I think it's a good idea for a company to use this certificate to make sure to make fact- based decisions in the future.
18:50
Thank you very much. (Applause)
18:59
Bruno Giussani: Hans and Ola Rosling![/quoteem]